Justices test both sides of tax case

S.C. Supreme Court justices Tuesday aggressively questioned lawyers on both sides of a momentous case that could reshape sales tax collections in the Palmetto State.

Attorney Cam Lewis, aiming to argue that the numerous exemptions to the state’s sales tax starve public education and are so haphazard as to be unconstitutional, was interrupted by a justice before he could utter three sentences.

Associate Justice Donald Beatty asked Lewis why his plaintiff, a Columbia lawyer with two school-age children, had the legal standing to even bring a suit.

Lewis responded that his client had standing because, like other South Carolinians, he has to pay more for education than he would have to otherwise because legislators have carved a series of exemptions into a sales tax system, specifically set up to pay for education.

End those exemptions, Lewis argued and South Carolinians would see $2 billion to $3 billion restored to public education.

The justices didn’t seem any more thrilled with what they heard from the defenders of the sales tax exemptions.

The defenders argued that the exemptions legally were approved by the General Assembly and that it is not the role of a court to address policy questions, including whether too much money is lost because of the exemptions.

Emory Smith of the S.C. Attorney General’s Office said questions about the sales tax exemptions are policy issues and their public importance is not so great as to allow the court to override the General Assembly’s role in setting policy.

Chief Justice Jean Toal wasn’t buying that argument. “Its’ public importance is set forth very clearly,” she said.

Lewis said he expected the justices to be tough on him and his legal opponents.

“This is what they call a ‘hot’ court,” he said.

“Hot courts test you. They were testing each side.”

The sales tax case is not merely a dry legal examination of whether the state can pass a sales tax and then pass exemptions that take significant chunks of that revenue and use it for other purposes.

If the justices rule that the exemptions are unconstitutional, it could be a boon to public education.

Others argue such a ruling would be a crushing economic blow to a variety of industries that suddenly would have to fork over sales tax money.

Consumers, too, could be affected if they have to start paying sales taxes on electricity, now exempt, or to other businesses now exempt from charging the tax.

Roughly $3 billion in sales now are exempted from sales taxes.

The importance of the case was evident by a the packed court room and by some of those in attendance.

Columbia Mayor Steve Benjamin and his predecessor, Bob Coble, were there. S.C. Attorney General Alan Wilson and Bobby Harrell, speaker of the S.C. House of Representatives, were there, too.

Dick Harpootlian, chairman of the S.C. Democratic Party and a private attorney who is Lewis’ co-counsel in the case, sat next to Lewis but did not address the court.

However, Republican House Speaker Harrell — who with fellow Republican and state Senate leader Glenn McConnell has promised to reform the state’s tax system next year — was well aware of Harpootlian’s presence.

After the sides exchanged oral arguments, Harrell put forward his own to a pair of reporters.

“This is clearly a Democratic Party attempt to use the court to force Republicans to raise taxes,” Harrell said.

“I hope the court sees through it.”

Harpootlian said that wasn’t true.

“I’m a lawyer,” he said. “This is my day job. This is a matter of public interest.”